A major change to Universal Credit rules came into force on Monday (January 30). It affects more than 120,000 working people who receive the benefit.
The Administrative Earnings Threshold (AET) has been changed. The AET determines which group a Universal Credit claimant is placed in, based on how much they earn.
This, in turn, impacts the level of support they receive to find work. It also dictates how active they have to be in that search, including how often a claimant needs to attend a JobCentre appointment.
The change to the AET will see more people move from the 'Light Touch' group to the 'Intensive Work Search' group. Those in the latter group are required to make more commitments in order to keep their Universal Credit. Essentially, if your income falls below the new AET, you will be in the Intensive Work Search category.
The latest change follows one in September 2022, where the AET was moved from nine hours of work per week to 12. As of Monday, January 30, it increased further, to 15 hours. That means that everyone working up to 15 hours a week now falls into the Intensive Work Search group, compared to nine hours a week prior to September last year.
The Government said that meant that around a quarter of a million more people will have been moved into ‘Intensive Work Search’ compared with before the September change. It added that "new claimant commitments will be tailored to individual circumstances and will consider caring responsibilities and any health conditions".
Previously, the AET rate was £494 a month if you are single and £782 if you claimed as a couple. Now, the rate is £617 for singles and £988 for couples.
Not everyone receiving Universal Credit will be affected by the new rules, even if they do earn less than the new AET rate. For example, you are exempt from the commitments if you are unable to work due to long-term sickness or disability. You are also exempt if you are over the state pension age which currently stands at 66.
Secretary of State for Work and Pensions, Mel Stride MP, said: "A hallmark of a compassionate society is giving those on low incomes the tools to progress and earn more. It is important that we continue to deliver targeted support so that those in work have access to the expertise and guidance of our dedicated work coaches. By raising the Administrative Earnings Threshold, we are forging a robust labour market building on positive changes we have already made and supporting even more people to progress in the workplace."
The new AET is the equivalent of an individual working 15 hours per week, or a couple working 24 hours per week between them, at the adult National Living Wage rate. The Government added that, this year, it would also be "driving forward an agenda to ensure the labour market remains robust, reviewing workforce participation at pace to understand what action can be taken to drive down economic inactivity".
In 2021 the Universal Credit taper rate was reduced from 63% to 55% and the Work Allowance was increased by £500 per year so claimants can keep more of what they earn. The National Living Wage is also increasing by 9.7%, bringing it to £10.42 an hour from April.
A government spokesperson added: "This rise to the AET will build on this work to ensure work pays and will be complemented by a new In Work Progression offer, which will be rolled out to all Jobcentres by the end of March, focused on helping claimants in the ‘Light Touch’ work group to progress."
People impacted by the change will be contacted with more details via their Universal Credit journal. Claimants will receive this journal message at the end of their first full assessment period after Sunday, February 26.
